Over the last decade the emergence of New World wine producers in the international market has to some extent diluted the dominance of traditional wine producers such as France, Italy, Spain and Germany.

Chile has played a lead role in this process with the national industry growing exponentially.

In only ten years the country's wine exports exploded from $30m to $600m per year, and the number of exporters grew from 12 to 170.

However, signs are emerging that Chile could become the victim of its own success.

Annual production has risen to 900 million hectolitres when the internal market and exports can only absorb 600 million.

Lack of strategy

And it is becoming clear that Chile needs a strategy to promote the national industry.

Over production is a problem

Despite the fact that Chile is now ranked fifth in the world wine export league, the country has failed to establish a strong international image for its wines, according to a study carried out in the US, UK, Germany and Japan.

The consumer image of Chile as a wine producer leaves a lot to be desired, according to Luis Hernan Bustos, managing director of consultants Interbrand which carried out the study.

Producers are now concerned that if the industry does not act to address this lack of image they will begin to fall behind New World competitors such as Australia, South Africa and New Zealand.

Losing ground

US Government statistics suggest that Chile is already losing ground to its competitors.

Between 1999 and 2000 Chile's exports to the US grew by 15%. But that compares to an increase of 37% by Australia, 51% by Argentina, 39% by New Zealand and 36% by South Africa.

Another key is for producers and the public sector to establish a common front in promotion

Alejandro Jimenez Chilean wine critic

"It is necessary to invest in promotion of the national image and not of individual regions," said Chilean journalist and wine critic, Alejandro Jimenez Susarte.

"Another key is for producers and the public sector to establish a common front in promotion and deep study of markets."

"It is no coincidence that Australia and South Africa have organisations like the wine export boards, that watch the markets and establish strategies," he explained.

Need for unity

One key problem in terms of national promotion has been the division between the two wine associations Vinas de Chile and the smaller Chilevid.

In an attempt to confront the problem both associations have agreed to re-launch the promotional organisation Wines of Chile, whose activities were suspended some years ago because of disagreements.

Top wine exporting countries

France 40.8%

Italy 17.6%

Spain 9%

Australia 7.1%

Chile 4.6%

US 4.1%

Portugal 3.7%

Germany 2.8%

South Africa 1.9%

UK 1.3%

Argentina 1.2%

New Zealand 0.7%

"Everyone has realised we need to return to a common front and we have now fully agreed to work together," said Douglas Murray, Director of one of Chile's best known producers Vina Montes and the first Chairman of Wines of Chile.

"We have faced, analysed and are on our way to solving our unified marketing strategy problems."

According to Matías Elton, VP of Vinas de Chile and General Manager of Vinas San Pedro, bringing the two associations together is just one of the measures necessary if the industry is to face up to the challenges of an increasingly competitive international wine market.

"This is only the starting point of a branding strategy that needs to unify the industry, increase the credibility in the market and improve the country's negotiating powers," he said.